There was further coverage this weekend in the UK in The Times of the systematic sharp practice shown by the large UK utilities, in this case British Gas (Buyer beware or be fleeced, TimesOnline, January 2, 2010). In essence, the trick goes something like this. Write a polite letter informing customers that there will be some changes to their account, keep the terms vague or obscure, and tell them that everything is OK and that they don’t have to do a thing.

The sting in this tail is that British Gas was, in fact, proposing to hike the customer’s gas rates up by 42%...and then when they were challenged by the customer, they instantaneously reduced the price raise down to a mere 0.4%, calling into question just how ‘necessary’ the price rise was in the first place. Indeed, it raises the wider question of whether British Gas has been getting away with unnecessary 40%plus rises across a wide and unsuspecting swathe of its customer base.

This is, of course, terrible practice and relies on customer ignorance and inertia on the one hand, and a lack of a decent alternative on the other. The journalist concludes that the only way around this is to switch and switch frequently.

However, this situation provides a huge opportunity for British Gas’s competitors. Tell the customer what they currently pay, what they’re going to pay, why the changes are occurring and what they need to do next. As consumers become more and more aware of just how much they are being gouged they will look to a more trustworthy alternative. If one of British Gas’s competitors can be consistently clear, they will be the warm embrace that customers turn to.

In fact, Ofgem, the regulator, could be stepping in here. Require the utility companies to be transparent and let’s see whether they try and get away with raising prices by 40% plus at a time. The Financial Services Authority’s Keyfacts initiative has started the process of requiring financial services providers to be clear and easy to compare. Why not introduce similar requirements for utilities, which surely must be simpler to implement. This has got to be in the interest of the customer.

In the meantime, the opportunity remains clear for the utility providers: clarity for competitive advantage.